New Zealand's fuel companies are expected to start selling biofuels from 2008 as part of the Government's policy to fight climate change and reduce our dependence on imported transport fuels. Biofuels will have to account for at least 3.4 per cent of total fuel sales by 2012. Oil companies have not revealed exactly how they will meet the targets but they could introduce bioethanol petrol blends for 91 or higher octane petrol or biodiesel.

What is biofuel?

Fuels that can be produced from or are made up of a renewable material of plant or animal origin. Those used in transport are typically bioethanol and biodiesel blends. Bioethanol is made from sugar and starch products while biodiesel is produced from vegetable oil or animal fats.

What are the benefits?

Biofuels can be carbon neutral because the carbon released is balanced by what is absorbed by new growth. While the conversion of plants into biofuels requires energy it is estimated that carbon emissions can be halved.

Do biofuels hurt the environment in other ways?

There have been concerns overseas. Rain forests have been felled to create land to grow biofuel crops and food production has suffered because of the economic incentives associated with the rising demand. That could impact most on poor countries which rely on imported food for their subsistence. However New Zealand requires that biofuels used here must come from sustainable sources and not impinge on food supplies.

Can biodiesel and bioethanol be made in New Zealand?

New Zealand produces tallow, a by-product of the meat industry. If converted to biodiesel, this could produce around 5 per cent of our diesel fuel needs. We currently produce bioethanol from whey, a byproduct of the dairy industry, to meet around 0.3 per cent of our petrol needs with the potential for increased production. Other options include maize and wood processing byproducts.

What countries currently use biofuels?

Biofuel blends are widely used around the world.

Does the use of biofuels affect vehicles?

There have been suggestions that bioethanol blends of over 3 per cent could damage the fuel systems of older imported cars made for the Japanese domestic market. The Government claims the concerns are exaggerated.

Will biofuel blends cost more than standard fuels?

The relative price of biofuel blends and ordinary petrol and diesel will depend on the price of oil and the price of production and supply of biofuels. The Government will forego excise tax on the bioethanol element of biofuels as a way of promoting them but that might push up the tax on non-bio fuel.

Will you be able to change between biofuel blend fuel and ordinary fuel?

There should be no noticeable effect changing between renewable biofuel blends and conventional fuels.